Small FIIs make a killing in NTPC float

The shares of National Thermal Power Corporation (NTPC), which are to be listed on November 5, are attracting a lot of interest overseas, courtesy a clutch of foreign institutional investors (FIIs) which got allotments to the extent of nearly 100 per cent of the amount they had bid for.

According to sources, NTPC attracted a lot of small-time FIIs, some with a maximum fund size of $100 million. "Though this might be big by Indian standards, on a global scale it is practically peanuts," a merchant banking source said.

These funds are not so keen to hold on to the shares and have already offloaded it at a small premium to interested parties overseas in forward trades.

Merchant bankers familiar with the details said that these funds were not really committed in the long term to the Indian power sector.

"The power sector in India, is a story which is not very inspiring, especially after what happened to the fast track projects and the Dabhol Power project," said a source.

Despite the Electricity Bill, 203, which had paved the way for some wide ranging reforms in the sector, global investors have not re-rated the sector significantly.

The funds are learnt to be selling it to investors, which include non-resident Indians and some other India-dedicated funds, which have a longer term view of the market.

Even a mark-up of around 500 to 1000 basis points would give foreign funds substantial gains, market sources said. Smaller funds were attracted to the IPO because of its aggressive pricing at less than $1.50 (the allotment was made at Rs 62 a share). "So those looking for making a quick buck, have their opportunity here," an analyst said.

The IPO, which closed on October 14, received a substantial response; it was oversubscribed nearly 13 times, mopping up almost Rs 68,250 crore at Rs 62 a share.

FIIs put in bids for 60510 million shares, accounting for 54 per cent of the total bids received and seven times the issue size of almost 865 million shares.